Q&A with Joe CharlesPosted on
Joseph Charles, 69, founded Charles Industries in 1968 when he developed the single-entry load coil in the basement of his Illinois home. It went on to become the best selling load coil in the world, in service with every Bell operating company, as well as a majority of independent companies.
Charles later added marine and industrial business units, and his company has grown into a $120 million international manufacturer of telecommunications and electronics equipment. It is based in Rolling Meadow, Ill., with manufacturing sites in Illinois, Missouri and California.
Charles received a bachelors degree in business administration and economics from Culver-Stockton College in Missouri and has served as a trustee and executive committee member of the college since 1976. He received an honorary doctorate of business administration in 1981.
An avid boater, Charles is on the board of directors of the American Boat and Yacht Council and is a member of the National Marine Manufacturers Association. He also has been leading fund-raising efforts for Broward (Fla.) Colleges Marine Technology Center of Excellence.
Charles owns an 80-foot Burger he keeps on Lake Michigan. He and his wife, Barb, serve as their own crew onboard Chateau Thierry, named for the place in France where his great-great-grandfather was born. They also own a 56-foot Neptunus Express they keep in Florida, called C-Charger.
Q. You started your company manufacturing products for the telecommunications industry. What made you move into the marine industry?
A. In 1981, we acquired a company that was making battery backup systems for overhead cranes for the shipyards, and they were manufacturing battery chargers for those. What it was was a backup system, so it had large banks of batteries. So for any reason if the magnet used to pick up the steel were to fail, the electrical were to fail, the battery backup would take over. Then after you drain the batteries you have to charge them with something, so you charge them with a battery charger.
Barb and I have always been into boating from a recreational standpoint, so we thought Lets start making products for the marine industry, because as we cruised around Lake Michigan and up and down the Tom Bigby Waterway to Mobile (Ala.). And everywhere you went, there was always a lack of either the proper fitting or we didnt have the right plug, or we didnt have the right connector or whatever. So we decided we would get into the marine business and start making some of this ourselves. We actually marinized the battery charger that we used to use for these overhead magnetic crane battery backup systems. Thats how we got involved.
Q. Once you were in the marine industry, how did you make the move into marinas and storage?
A. Were residents of Florida, and years ago what we used to do, we would spend time in Florida and then we would go back to Chicago where we boat on Lake Michigan we have a boat on Lake Michigan, as well. Every time we would leave, of course, we would have a hurricane and it got a little old, like what do you do with your boat when you have a hurricane?
So what we attempted to do was find a small building, somewhere in the Jupiter-Palm Beach area, that was large enough to put our boat in, put an air conditioner in it with an alarm and then Barb and I would go back to Chicago, jump on our other boat and boat during the summer and not have to worry about the hurricanes.
We couldnt find a place big enough to store our boat, or reasonable enough, and a friend of ours who was a boat captain said Hey, theres some land in Stuart available. So we drove up to Stuart and we looked at a piece of land that it turns out was not available, but a piece a little bit down the waterway was available. And it was about 9 acres of property and it was an old junkyard that they used for cutting barges apart and [then] they would sell the steel.
So we made an offer on the property in April of 03 and they accepted, and in February of 04 we broke ground, and this is our third year in business.
What were doing here is providing air-conditioned storage space for large craft during the summer, when Barb and Joe go back to New Jersey, Chicago or Madison, Wis. or wherever [theyre] going. We have customers from the West Coast, Colorado, Wyoming, who boat down in Florida in the winter and then store their boats with us during the summer. So we take them out of the water, put them inside an air-conditioned storage facility and we presently have over 70 vessels inside this building. Its 46,000 square feet. And we do bottom jobs and shaft alignment and sell electronics and things of that sort.
Thats how we got involved. We kind of backed into it. We ended up with a very, very unique business, one of the only air-conditioned storage facilities for larger vessels in the state, and were presently building another site over in LaBelle, Fla., over on the other side of Lake Okeechobee, for the West Coast.
Q. What are your future plans for your marine businesses?
A. In the marina storage area, we bought 30 acres in LaBelle and were presently putting up three buildings. The buildings are 51,000 square feet and theyll hold somewhere between 70 and 80 vessels. We have an 85-ton lift over there, a clubhouse and boat basin. It will be quite a facility. Well do the same type of service work over there as well. The need stimulated a business, and now its really turned into a major business.
On the manufacturing side, what we produce primarily are electrical components for larger boats and medium-sized boats. The biggest part of our business are battery chargers and isolation transformers and load-balancing equipment for electrical. Its high-voltage stuff.
It continues to grow every year in spite of the fact that the marine industry is on its back, if you will. The types of products that we make are great aftermarket products, so weve tried to do things out of the norm, if you will. We recognize specific issues and go after those as market opportunities rather than trying to design a product that theres no need for out there. Were primarily a marketing-driven company, rather than an engineering-driven company.
Q. How did you become involved with Broward College and raising funds for its Marine Technology Center of Excellence?
A. Years ago, I became active on the American Boat and Yacht Council board and I was a director on ABYC. Everything we do is centered around boating safety and education. Well, you can only serve on the ABYC board for four years and then they summarily throw you off, and at that time I was still interested in serving and they asked me if I would stay on, but be a director of the ABYC Foundation.
The foundations primary mission is to raise money to help fund the projects of the council. So, as things went on, an individual who was the chairman of the foundation opted to retire, so they asked me to be the chairman of the foundation. So, through my association with the ABYC Foundation, I met the folks at Broward College. And what they were attempting to do was to start a marine technology trades program, whereby they would train adults, youngsters with a trade. And many of these were individuals without college degrees.
The big need right now is for trained people. If youre installing air conditioner systems on a boat and you go out and try and hire somebody, chances are slim to none youll find anybody.
I was able to put the ABYC together with Nancy Botero, who is the executive director of the Broward College Foundation, and they have three different segments. They have an aircraft division, they have an automotive division, and in January we started a marine technology center of excellence, if you will. At the present time were trying to raise about $3 million, which well be able to get matching funds from the state. So that will give us $6 million to convert this automotive facility into a Broward College marine technology center.
What I attempted to do at the IBEX show last year, was to go around and solicit donations from manufacturers for equipment that we could start the program with. Dometic donated a head system and an air conditioning system for a 32-foot Bayliner; Teleflex donated a steering system; Perko donated sea strainers and running lights; Atwood donated bilge pumps and bilge blowers; Paneltronics donated electrical panels; Charles Marine, we donated battery chargers, the cable pieces, the hull inlets and the isolation transformers. Kahlenberg Brothers donated a horn system, Raymarine donated a complete electronics package.
There are about 14 companies that donated equipments, so we raised about a quarter of a million dollars worth of equipment to put on this boat. My pet project was to go out and get equipment.
Q. Why was it important for you to get involved with this project?
For some time, Barb and I have been very much involved with the handicapped sailing programs. A few years back, we donated a Catalina sailboat, which was all handicap-rigged, to the Shake A Leg program in Miami. We also donated a sailboat to the Judd Goldman Adaptive Sailing Foundation, which is a handicapped sailing program in Chicago.
So, the Broward College program really struck a bell with us, because what were attempting to do by phase two, if you will, of this, is to set up an electronic repair center at the college for handicapped, whether theyre handicapped vets, whatever, and use that as a repair center.
So picture yourself having a VHF radio and you have to send it somewhere for repair so you call the service center and they say, Well, send it to the marine technology center at Broward College. So you send it, they give you an RGA number so you can send it back and the company can account for it and its worked on by the handicapped and repaired and returned to you and the time is then charged to the company.
They make a contribution then to the foundation, thereby the cost to repair a product is considerably less. Its not $80 or $90 or $100 or $200 an hour for a tech. Maybe its at $10 or $12 an hour. So theres an incentive by most of the companies in the industry to help train these people because its going to reduce their warranty costs. So its an industry win-win and look what were doing: were training handicapped people, and youd almost be ridiculous if you didnt take advantage of the opportunity as a repair center. So thats what were trying to do.
In Barbs and my own way, were trying to do our thing, call it giving back or whatever. We certainly have the contacts in the industry and when you talk to somebody about donating a head system or donating trim tabs or an electronic package, keep in mind this doesnt have to be brand-new equipment, it can be repaired, it can be remanufactured. It doesnt have to be new. If its got scratches on it, so what? Were going to be putting it on and taking it off and putting it on and taking it off, so its going to have a heck of a lot more scratches and dents in it by the time our students get through with it.
Q. Has it been difficult to get other marine businesses or business owners to commit money or equipment to the project? Did you raise the $3 million youd hoped?
A. Equipment is easy, money is difficult. The industry right now is going through some pretty tough times.
Getting equipment is pretty easy, getting remanufactured equipment, repaired equipment is easier to get. And I dont care what we get, as long as we get donations and the equipment works, I dont care.
Weve got a long way to go (to reach $3 million), a long way to go. Every dollar that we get turns into $2, so I think weve got about $2.5 million to go. Theres several people out there that have committed, but weve got a ways to go. We just started this thing in January. We started out with 20 students at the January session, put on a limit of 24 students, we already have 24 signed up for the second session and we have a waiting list.
Its a $6,000 program, its a two-year program and the students end up receiving, upon successful completion, an associates degree. Theyre not just spinning wrenches and hooking up wires. They go to class, they write, they know how to add. Its a little short business course, along with a hands-on course, along with internships, and were soliciting internships.
Were just kind of going out there now. Many of the people enrolled in the class, some are already working for boatyards. Any of the students that need an internship, its easy for us to find them one.
Q. Talk about the event being planned at the Fort Lauderdale International Boat Show.
A. What were going to do Thursday (Oct. 30) at 5:30 p.m., were sending out invitations to everyone who has donated and of course the media, and its going to be a wine-and-cheese, maybe some hors doeuvres. Charles Marine and River Forest Yachting Center, the two companies we have, will sponsor the get-together. We dont expect more than 40 or 50 people, and well be giving out framed certificates to all those companies that helped us out initially, with a little story about what were doing and where we are and what were looking for. We will have some students there, too, to talk to.
Q. Do you think the marine industry needs more of these programs? Are there jobs out there for these people once they graduate?
A. Theres a need for technically trained people. The people who are getting laid off are not your higher-trained technical people. Highly technical trained people are very hard to come by. The ABYC, our education piece, we are well and above last year for people who have signed up for our courses. Thats where the need is. That part of its good. Good people are hard to find, good people arent walking the street. If you have somebody thats good, theyre not going anywhere.
Q. Talk a little bit about the state of the industry. Does it worry you for your business or the future of the marine industry in general?
A. Its like anything else, I think the American people are very resilient. You can say, well, were not going to spend $4 on fuel or $5 on fuel. One of our customers just came back from the Bahamas and he paid over $6 for fuel. He said Gee, that was a lot. And I said But you still went. And he said Oh yeah. I remember when fuel was 25 cents a gallon, we can all remember when it was $1, then it went to $2 and everyone complained, then it went to $3 and people complained, it went to $4 and people complained.
You drive on I-95, as I do coming to Stuart from Jupiter every day. Im driving 62 mph, I just put it on cruise control, everybodys flying by me like Im standing still, so I dont think [every one] really cares. If they did, they wouldnt be driving 85 or 90 mph and blowing it out the back end.
The American people somehow find a way or make one. Theyll find a way to do it.
The go-fast boats are certainly down, but the smaller boat business is still alive and the higher-end boats are alive that market always seems to be very solid.
Is the market tough? Darn right, its tough. I say its time to look at your market and see how you can change what youre doing to increase your business.
At Charles Marine, were not trying to beat the same old drum, were going after the refits, what can we do in the aftermarket. Forget the OEMs, theyre on their back. What can we do that will help the [boaters] of the world who have a boat that needs some electrical work? Lets put a kit together, lets put a package together and thats what were doing.
You cant just sit there and say business is bad.
Q. When do you see the industry picking up, and do you think it will have changed after having gone through this downturn?
A. I think the industry is going to be stronger. I think a lot of this business is going to shake out. Many people have obviously overexpanded. If you have one plant making boats and it looks like youre going to [need more space], lets go build another plant. Lets not worry about improving efficiency. Lets build another plant. It seems like the mentality of the marine industry, being a very old industry, is keep doing it the same old way. You can walk through boatyards and theyre still doing the same thing.
Last year John Smith, our general manager, spoke at IBEX, trying to say our business is changing, youve got to be flexible. We have a boat transporter that we use to put boats inside the building. The boat transporter enables us to put boats within an inch or two apart. If you use a [traditional lift], youre about six feet apart, so buy a transporter, folks.
Well, one guy said, Well, I have an acre-and-a-half of land. I cant justify spending $100,000 on a transporter like you all have. Johns comment was you cant afford not to because youre going to increase your capacity by up to 30 percent. The guy said Nah, how do you figure that? Pretty simple pal, more boats per acre. Thats the mentality Nah, weve always done it this way. It doesnt make sense.
Industry wise, this is going to be a tough year. I think this is a shake-out year for a lot of people. I dont look for great attendance at the IBEX show because the manufacturers cant afford it. I dont see a tremendous turnout at the Fort Lauderdale show because the family thats buying the 35-45 foot vessel has been greatly affected; theyve been affected the most. Thats a tough market and thats the crowd that usually comes to the shows, at least the heaviest turnout.
I expect its going to take another year at least. This year is done, and I think next year is a building year. The elections have a lot to do with it, depending on what your persuasion is. If you listen to one guy, everybodys coming back from Iraq and fuels going to be a quarter a gallon. I guess if thats going to happen, next years going to be a good year. If you listen to the other guy, maybe it wont be so quick.
No matter who gets in, the fuel prices will more than likely start to settle back down. The thing thats exciting to me is the industry, in this respect, is responding. The [Volvo] IPS system enables you to put smaller engines in your vessel, get better fuel economy. So if youre burning less fuel and you can go faster with a boat with smaller engines that means youre not spending as much discretionary income on fuel, so youre going to boat more.
If we can reduce our fuel consumption by 15 or 20 percent, its certainly going to get someones attention.
This article originally appeared in the October 2008 issue.